Walt Disney Inc. Brandy Anderson Cody Bartos Jessica Edmunds Amy Sobolewski Kelly Stevenson Ryan Vincent HCRM 201 November 6, 2000
Walt Disney Inc.Brandy Anderson Cody Bartos Jessica Edmunds Amy Sobolewski Kelly Stevenson Ryan Vincent HCRM 201 November 6, 2000
Table of Contents
I. II. III. IV. V. VI. VII. VIII. IX. X. XI. XII. XIII.
Introduction History Firm Identification Organizational Structure Career Paths Target Market Retail Mix Merchandising Channels and Procedures Store Design Disney News The Future Conclusion Reference List
2 3 6 7 10 11 12 14 15 16 19 22 23
Introduction Disney is an enormous entertainment corporation that was built upon one mans vision and imagination, that man was Walt Disney. This corporation encompasses many different entities of entertainment for people of all ages. It all began 75 years ago when Walt Disney single-handedly developed his first animated feature film. From here it blossomed into an empire of theme parks, vacation resorts, and merchandising channels. Through this magical kingdom a sense of euphoria is created, allowing all that visit to briefly return to childhood, a place where they can wish upon a star and have their dreams come true. Walt Disneys wish for those who visit is stated on a plaque in Disneys Town Square. It reads as follows: TO ALL WHO COME TO THIS HAPPY PLACE: WELCOME. DISNEYLAND IS YOUR LAND. HERE AGE RELIVES FOND MEMORIES OF THE PAST AND HERE YOUTH SAVOR THE CHALLENGE AND PROMISE OF THE FUTURE. DISNEYLAND IS DEDICATED TO THE IDEALS, THE DREAMS, AND THE HARD FACTS THAT HAVE CREATED AMERICA WITH HOPE THAT IT WILL BE A SOURCE OF JOY AND INSPIRATION TO ALL THE WORLD JULY 17, 1955.
History May all your dreams come true! Who was the creator of this unforgettable phrase, Mickey Mouse, and won thirty Academy Awards? Who else, but the great Walt Disney. Walt Disney was born in Chicago on December 15, 1901. Walter Elias Disney was the fourth son of Elias Disney and Flora Call. Walters father was a farmer and his mother was a schoolteacher. Walt spent most of his childhood in Marceline, Montana. This is said to have furnished the inspiration and model for the main streets of Disneyland. His family moved to Kansas, and this is where young Walt began studying cartooning at a school and ended up going to Kansas City Art Institute and School of Design. Disney moved back to Chicago in 1917 and entered McKinley High. Here, he made drawings for the school newspaper and took photographs. World War I interrupted Walts schooling, because he had to participate as a truck driver in France and Germany, for the American Red Cross. In 1919, Walt returned to Kansas City. There he became an inker in commercial art studios and a draftsman. He met U.B. Iwerks there. Disney and Iwerks started their own small studio and made one and two minute animated advertising films on a second hand motion camera. They also did a series of cartoon sketches called Laugh O-Grams and seven-minute animated fairy tales. They called the fairytale Alice in Cartoon land. A young, New York film distributor cheated the two of them, so they headed for Los Angeles, to be with Walts brother, Roy. Roy became their business manager. They invented a character, by the name of Oswald the rabbit. The films were contracted for distribution at $1,500 dollars. This
started their small enterprise. In 1927, Disney and Iwerks wanted to try a new charactera happy, full of energy, and mischievous mouse, named Mickey. In 1928 Disney produced Steamboat Willie. This cartoon was different then all the rest, because it had sound! Next they created Minnie, who was Mickey Mouses girlfriend. She had a personality and the voice like a human. Walt Disney was the voice of Mickey! This then lead to the creation of Donald Duck, Pluto and Goofy in 1933. Roy then franchised tie-in-sales with Donald Duck and Mickey with such things as: watches, T-shirts, and stuff animals. This grabbed much more wealth for the Disney Company. Walt Disney, still on the go, decided to make feature-length cartoons. His first was Snow White and the Seven Dwarfs (1935), Pinocchio (1940), and Dumbo (1941). Disney studios now decided to make a variety of entertainment films. Walt Disney owns four motion-picture companies. Walt Disney Pictures, which is family entertainment films. Then there is Touchstone Picture and Hollywood Pictures, which produce films for adult audiences. Miramax Films created motion pictures by independent filmmakers. The company also owns Walt Disney records, which does recordings for children and The Disney Cable Television Channel for family entertainment. Meanwhile, back in the 1950s, Walt Disney came up with an idea to build an Amusement park near Los Angles. It opened up in 1955 and is the best-known purveyor of child and adult entertainment in the 20th century. Then in 1971 Walt Disney World along with the Magic Kingdom opened up near Orlando, Florida. Disney World also has hotels, resort accommodations, and sports and other recreational facilities. The EPCOT center was added in 1982, which stands for Experimental Prototype Community of
Tomorrow. In 1989 Disney-MGM studies Theme Park, which has exhibits, shows and movie studios. Tokyo Disneyland opened in 1983 but it is an unrelated Japanese corporation with Walt Disney Company, which receives loyalties from that venture. Euro Disneyland was completed in 1992, 20 miles west of Paris. The Disney Corporation acquired Capital Cities/ABC Inc. in 1996, which owned the ABC television network. After Walt Disneys death on December 15, 1966 the Disney Corporation declined because they lost their chief innovator. They got new management in 1980. Their animated films and motion pictures became most successful in the United States. Touchstone Films produced films such as Splash (1984) and Pretty Women (1990). The Disney Company produced The Little Mermaid (1989) and Toy Story (1995), which is the first full-length animated cartoon. Walt Disneys humor, imagination and his gift for being attuned to the vagaries of popular taste inspired him to develop well-loved amusement for children of all ages throughout the world. He touched millions of dreamers hearts!
Firm Identification The Walt Disney Company is a diversified worldwide entertainment company. The company is broken up into many different groups. There is the media network, which includes broadcasting and cable networks. Broadcasting which includes ABC Television Network, ESPN and Toon Disney. The studio entertainment produces animated pictures for theatrical, home videos and television markets. There is a theme park and resort section. These include such things as Walt Disney World Resort in Florida, Disneyland Park, the Disneyland Hotel and the Disneyland Pacific Hotel in California. The Disney Store and Disney Interactive Software are in the consumer product segment. Direct marketing and Internet have online activities that have to do with consumer interest. The info seek corporation is now a wholly owned subsidiary of the Disney company. Most of the business is done in the United States, Asia Pacific, Europe, Latin America, Canada, and other countries. Media works had 32% of the fiscal revenue in 1999. Studio entertainment was 28%, theme parks and resorts were 26%, consumer products were 13%, and Internet and direct marketing was 1%. In 1999 Sales were said to be $23,402,000,000 and Disney employed 120,000 people in the United States. As you can see there is so much more to Disney then we all knew. The Disney Company has everything from the Disney Stores to the Disney Big Red Boat Cruise!
Organizational Structure Disney consists of many different entities. These entities consist of the Company itself, the amusement parks, and various stores. The Walt Disney company is the core of Disney responsible for all the other industries. The Walt Disney company's organizational structure is comprised of very important key people. These people are essential for maintaining Disney's overall success. The firm's organizational structure consists of first the chairman and CEO, Michael D. Eisner, then the VC; Chairman, Walt Disney Feature Animation, Roy E. Disney, VC, Standford M. Litvack, The President and COO, Robert A. Iger, and the SEVP and CFO, Thomas O. Staggs. This structure only applies to the Walt Disney Company's Organizational Structure. A major portion of the Disney Corporation is entertainment attractions such as theme Parks. Disneyland was the first born on the Magic Kingdom. It opened in Anaheim, California on July 17, 1995. This 45-acre park was created with the intention of making the visitors feel like they were spending a day inside a cluster of Hollywood films. The park was divided into smaller worlds including Frontier Land, Adventure Land, Fantasy Land, and Tomorrow Land. Disney World was the next park, which was opened in October of 1971. This development located in Orlando, Florida included an amusement park, three hotels, campgrounds, three golf courses, and a 7,500-acre wildlife preserve. The technology used in planning this Magic Kingdom was incredible. The entire Kingdom was built on a giant platform that allowed storage areas and service systems to be built beneath the surface. This permitted tasks such as garbage disposal to be taken care of without a garbage truck ever being seen on the streets on the park.
EPCOT Center was the third park to emerge. This experimental Prototype Community of Tomorrow opened October of 1982. The general theme for EPCOT is International- bringing countries to us, also, towards the future, using new technology, and developing solutions for the needs of people. Within all these different theme parks exists an organizational culture within the structure. "Organizational culture is the set of values, traditions, and customs in a firm that guide employee behavior (303). " These amusement parks self-proclaim themselves as the "Happiest place on the Earth." There is an emphasis put upon the employees to act cheerful and smile and to focus on the customer's satisfaction. This happy go lucky atmosphere is reflected through the company's organizational structure. The theme park's structure consists of the general managers for specific areas of the park, ride operators, sweepers, concession attendants which are referred to as hosts or hostesses. This terminology of calling employees down lower in the firm's structure as hosts or hostesses is to instill an attitude of job satisfaction amongst the employees. It is supposed to make the employees feel important about their job, which will hopefully lead to the best possible outcome of performing their job. The Disney store is the last entity. The Disney Store's main objective is to apply that same happy go lucky attitude in their stores as it is done in their amusement parks. The employees are always smiling and happy and will do anything to make sure the customer is satisfied. The store is a childrens delight representing a small little magical wonderland filled with Disney toys and apparel. This atmosphere couldn't be created without the employees themselves and the structure they are involved in. The Disney Store's organizational structure consists of the General manager or store manager, then
the assistant store manager of operations, and assistant store manger for human resources, following with assistant store manager for selling and merchandise, next group sales manger, sales mangers and last salespeople. The next step of Disney development was to go abroad, first to Tokyo, Japan and then to Europe. The Imagineers wont stop there though. They will continue to create and build, continually moving forward.
Career Paths The Disney Companys sheer size with all of held entities allows it to be very large employer. It alone employs more than 120,000 employees and a one-year growth of 2.6%. A wide variety of employment exists within each individual department and division that make up the Disney organization. Opportunities exist in Disney Consumer Products, Disneyland Resorts, Disney Regional Entertainment, Walt Disney Studios, Walt Disney Feature Animation, Broadcasting, Entertainment Productions, and The Disney Store. The Disney Store with 600 stores nationwide employs 20,000 workers, who they call their cast members. It prides itself in offering creative, fun, and imaginative opportunities for potential employees. Opportunities exist in their field operations that include positions such as store managers, district managers, and regional directors. Also available are corporate headquarters positions that include, but are not limited to product development, finance, information services, merchandising, distribution, and human resources. The Disney Company has a strong tie with college recruitment programs throughout the United States and abroad. Participants spend a summer internship at a Disney resort to learn valuable real-world information about the business is run. Students spend an average of 10-15 hours a week on technical workshops. With the opportunity of college credit available many students find this to be a rather rewarding program.
Target Market The Disney Company, in one form or another, can be found throughout many Americans lives. If the number of people, who come in contact with its goods, messages, values, and ideas can measure the Disney Company, it becomes clear that Disney has enormous influence on the cultural life of the nation, especially with regard to the culture of children. More than 200 million people a year watch a Disney film or home video, 395 million watch a Disney TV show every week, 212 million listen to Disney music, and more than 50 million go to one of the Disney theme parks every year. This leads the Disney Company to have quite a large market segment to focus their resources and retail mix. As apart of the entertainment industry Disney focuses on popular culture. Unlike Time-Warner, Westinghouse, and other large corporations, Disney is an icon of American culture and middle-class family values. It appeals to both parental concerns and childrens fantasies while trying to transform every child into a lifetime consumer of Disney products and ideas. The Disney Company has been able to assert its authority as a permanent icon in many of childrens lives. Disney prides itself in offering young people the promise of making their dreams come true through the pleasures of wholesome entertainment. Disney has designed itself to appeal to the imaginative senses of young children. The wholesome family entertainment is graced by the parents of these children and is seen as an opportunity to make their child happy. Disneys target market is very broad but can be narrowed down to the children of middle to upper income families. However, it is not only limited to toys and movies for young children. Almost everyone would enjoy a day at a Disney theme park or has watched a tv show or game on abc and espn.
Retail Mix A retail mix, as defined by our text, includes the factors used by a retailer to satisfy customers needs and influence their purchase decisions; includes merchandise and services offered, pricing, advertising, and promotions, store design and location, and visual merchandising. Within this definition there are four Ps: product, price, promotion, and place. The variety of products that Disney offers is almost limitless. Their merchandise includes infant, child, and adult size clothes, toys, games, movies, and collectors items. The table below lists some common products and their price. CATEGORY Adult Clothing Adult Clothing Childrens Clothing Childrens Sleepwear Infant Clothing Infant Clothing Toys Toys Entertainment Entertainment Collectors Collectors ITEM Pooh Sweatshirt Mickey Swimsuit Tigger Tennis Shoes Snow White Sleep Gown Coveralls Mickey Tee Thumper Stuffed Animal Disney Trivia Game Dinosaur Soundtrack CD A Bugs Life Video Tinker Bell Plate Fantasia 2000 Snow Globe PRICE $28.00 $48.00 $20.00 $20.00 $18.00 $12.00 $28.00 $35.00 $14.98 $14.99 $295.00 $95.00
A promotion is any activity undertaken by a retailer to provide consumers with information about the retailers store and its retail mix. One promotion that the Disney Store uses is having a sale, where merchandise can be purchased at a discounted price. Another way that Disney promotes itself is by making toy figurines for its newest animated film available at fast food restaurants. This promotion is an excellent way of reaching children by making the toy a free gift with the purchase of a kids meal. Another way promotion that Disney uses is television advertisements. Each time Disney creates a new animated film, a new childrens fad is born. (A fad is any product that generates a lot of sales for a short period of time.) Any merchandise featuring the new films characters becomes a very hot item. Therefore, by advertising the movies on television, they are promoting all the items in their store that relate to that movie. The last of the 4 Ps is place. The location of a retailer can be a primary factor in regard to the success of that store. Disney Stores are typically located in shopping malls, rather than as Free Standing Units. However, Disney merchandise can also be purchased at Disney Theme Parks. The stores located within the theme parks are normally in a strip-like format. There are usually concession stands, games, and other attractions in between them. One common characteristic of all Disney Stores is that they are located in high traffic areas, where they are available to a very large trade area. Another place the Disney Store can be found is online. Their address is http://disney.store.go.com. Merchandise from all of their categories can be purchased from this site. The online store even has promotional sales to accommodate those smart shoppers.
Merchandising Channels/Procedures The typical distribution channel has four steps: manufacturing, wholesaler, retailer, and consumer. Disney Stores use what is called vertical integration in regard to the organization of their distribution channels. This means that the firm conducts more than one of these steps under one roof. Charlie Sampera, the vice president of distribution, is quoted saying, Bringing our operation under one roof was critical to our strategy of significantly improving product flow, and customer service, while leveraging our technology. This distribution center is located in Memphis, TN. It is massive in size, covering 653,000 square feet. Its 250 employees are capable of shipping 900,000 units per day to 505 stores throughout the United States, Canada, and Puerto Rico. Technology has made the Disney Store extremely efficient. It has enabled the distribution center to process enormous volumes of merchandise each day to provide each store with exactly what it needs at the right time. There is also a team of people in Glendale, California that control the inventory for each retail store, along with the distribution center. This team determines all of the store orders.
Disney News In the past year Disney has been in the news for several reasons. The Disney Corporation has been launching many new movies including Toy Story 2 in November of 1999. The CEO, Michael Eisner, has also declared that Disney is expanding the Animal Kingdom into a whole new area, as well as promoting a fun online learning center for children. Disney revolves itself around entertainment for the whole family to appreciate. Last year around this time Toy Story 2 was the main attraction being advertised for Disney. The toys were backat the moviesand at The Disney Store. On a daring mission direct from Andys room, the beloved toys from Disney/Pixars Toy Story 2 infiltrated The Disney Store and were ready to provide hours of fun and entertainment for boys and girls last holiday season. We were so inspired by Toy Story 2 that weve been on our own special missionto extend the movie experience beyond the theater and bring it into The Disney Store, said Doug Murphy, senior vice president and general manager of The Disney Store-North America. Themed store windows, signs and banners, special movie offers, a toy demonstration station and cast members donning Toy Story 2 T-shirts were all part of an in-store marketing campaign to support the much-anticipated Disney sequel and its film merchandise. Not to their surprise, the movie Toy Story 2 did extremely well for Disney. All the time and efforts put into the making and promoting this animated story were all worthwhile.
According to a May 15, 2000 Business Journal exclusive report, the Animal Kingdom is about to get a little crazier. Walt Disney Co. CEO Michael Eisner confirmed that a whole new area currently is being designed for Walt Disneys fourth theme park. Eisner gave few details about the new section of the wildlife exhibit. Officials at Walt Disney World will say only that the area has not yet been announced. However, Eisner listed the Animal Kingdom expansion along with the Safari Lodge and Pop Culture Hotelboth of which currently are under constructionas examples of how Disney is not slowing down its capital spending in Orlando. We need more capacity and more rides, the Disney chief said while in Orlando to kick off the Millennium Dreamers event. When formal announcement comes, it should put an end to persistent rumors about what would come next for the Animal Kingdomrumors that began almost as soon as the park opened in 1998. Since the Disney Onlines child population is skyrocketing, they wanted to commit itself to ensuring safe, magical, imaginative online experiences for kids as they headed back to school this year. According to Internet research firm CyberDialogue, the number of children with Internet access from school will nearly triple to 46 million within the next five years. In response, Disney Online, which produces the No. 1 entertainment site for kids and families (www.disney.com), today releases a series of Web experiences including an all-new version of is online subscription service, Disneys Blast. In October, Disney Online launched and exciting new version of its popular subscription service, Disneys Blast (www.disneyblast.com), focused on providing kids
with a virtual world where learning is powered by imagination and exploration. Updated with even more animation and sound, the latest update of Disneys Blast offers kids over 100 exclusive online attractions that deliver educational value as well as endless hours of fun. The wealth of fun and imagination found on its year 2000 Back to School Web site (www.disney.com/school) has Disney Online soaring to the top of its class. In addition to a wide selection of games, printables, and contests themed for this special time of year, the site features of a unique Dress Your Pet Photo contest that encourages users to blend their television and online activities for a more dynamic entertainment experience. As you can see the news never stops for Disney. There are always new happenings and current events to be publicized; whether its dealing with an upcoming movie, an expansion of their theme parks, or helping parents educate their kids through the Internet. Disney goes to all levels to be the best they can be and are sure to keep up with new technology. Disney will go to extremes to continue entertaining the world by unveiling new and exciting renovations.
The Future The companys financial condition remains strong. The company believes that its cash, other liquid assets, operating cash flows, access to equity capital markets and borrowing capacity taken together provide adequate resources to fund ongoing operating requirements and future capital expenditures related to the expansion of existing businesses and development on new projects. Expansion of existing business includes continued film and television production, design and development of theme park attractions and resorts properties and expansion of the Disney Stores worldwide (Variety, October 9, 2000). Disney has struggled with its consumer products division in recent years because of lower worldwide licensing revenue, higher costs, and slower sales at Disney Stores. Walt Disney is going to invest over $300 million to revamp about 600 of its 740 stores worldwide. The remaining 140 stores will be closed as their leases expire. The stores account for 6% of the operating income of Disney Consumer Products Worldwide, while licensing accounts for 70%, according to Merrill Lynch & Co. research. The store is trying to go beyond the character-driven merchandise, to character free clothing with just a Disney label on the collar or button. Disneys retail sales rose to $75 billion, up from about $13 billion today. They are not looking for a quick turnaround, but Consumer Products should start to move in the right direction in 2001. It was time for us to change, said Thomas Park, president of Disney Stores Worldwide. The consumers tastes had changed, and we make these changes in tune with them (www.disney.com) The new stores are brighter, can display 40% more merchandise, and have computer kiosks where customers can buy items not available in the store or find out
about Disney Vacations. The stores are also more adaptable to change, allowing Disney to focus more on holidays like Halloween. Burbank-based Disney plans to complete the remodeling by the end of 2003. Park declined to say how much it costs to redesign a store, but Merrill Lynch & Co. analyst Jessica Reif Cohen said it costs about $500.000. The new stores are more efficient, require fewer employees, and are less costly than the older versions. For example, the new lighting delivers 30%-40% more brightness for 87,000 less than the old lighting, Park said (Hollywood Reporter, October 5, 2000) The forecast values for the company in sales in September 1997 were 22,473.000 and are expected to rise to 26,248.600 in September of 2001. The Net Income in September 1997 was 1,966.000 and is expected to be 282.900 in September 2001. The Long Term Dept in September 1997 was 8,205.000 and is expected to be 3,305.000 in September 2001. The Net Worth in September 1997 was 17,285.000 in 1997, and is expected to be 26,004.800 in September 2001. So on the average the company has a good outlook in the future. The Disney Company has two close competitors. Time Warner Inc. and Viacom. Time Warner Inc. had annual sales of 28355, Disney had 24781, and Viacom had 14842.7 in 1995. The revenue share for Time Warner Inc. was 21.49, Disney had 18.78, and Time Warner had 11.25. So the competitors are staying close to Disney and keeping them on their toes. Some people look at the Walt Disney Co.s Internet subsidiary and see about $400 million in losses on a cash basis in 2000. Disneys 72% stake in Go will rise along with the stock price, which has been lingering just under its offering price at around $11 a share. The Go tracking stock represents a cash drain on Disney, which funds its $350
million cash loss, said David Londoner of ABN-AMRO. Adjusted for taxes and other factors, Go represents a reduction in Disneys fiscal 2000 earnings per share of about 12 cents per share, he said (Electronic Media, October 2, 2000).
Conclusion We have all learned so much about the wonderful world of Disney through our presentation. Our idea was to talk about the Disney Store, when we found out that Disney is so much more, it is an entire empire! Walt Disney was a wonderful inventor who touched all of hearts, and even after he died Disney still continued to grow into something even bigger. Which resulted in animated films and theme parks, hotels, cruise lines, movie productions, and expanded itself worldwide. It seems as though the essence of Disney will never die. It will remain in our lives forever and future generations to follow.
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